Elanco Animal Health reports 3Q 2024 results
Poultry Times
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GREENFIELD, Ind. — Elanco reports its financial results for the third quarter of 2024, provided guidance for the fourth quarter of 2024, and tightened guidance for the full year 2024.
“Elanco’s expanding portfolio supported our fifth consecutive quarter of underlying organic constant currency revenue growth in the third quarter, and we continue to expect 3 percent organic constant currency growth for the full year,” Jeff Simmons, Elanco president and CEO, said. “It’s exciting to see our Innovation, Portfolio and Productivity strategy come to life with new products driving growth, led by Experior?, Adtab and Zenrelia, and we expect this growth to accelerate to mid-single digits in 2025.”“Our late-stage pipeline has largely moved into commercialization mode with the U.S. FDA approval and launch of Zenrelia, which is off to a great start in the U.S. and Brazil,” Simmons added. “Additionally, we received U.S. FDA approval for Credelio Quattro, positioning Elanco to bring positively differentiated products to the two largest pet health markets that will contribute to an expected return to growth for U.S. pet health in 2025. Finally, we continue to drive improved cash flow and deleveraging, finishing the third quarter with net leverage at 4.3x, down 1.3x compared to June 30th aided by the proceeds from the aqua divestiture and debt paydown from operations, with continued deleveraging expected in 2025.”
In the third quarter of 2024, revenue was $1.030 billion, a decrease of 4 percent on a reported basis, or an increase of 1 percent when excluding the unfavorable impacts from the aqua divestiture and foreign exchange rates compared to the third quarter of 2023.
Farm Animal revenue was $530 million, a decrease of 6 percent on a reported basis, or an increase of 3 percent when excluding the unfavorable impacts from the aqua divestiture and foreign exchange rates, driven by a 3 percent increase from price, compared to the third quarter of 2023. Third quarter volumes were flat primarily driven by strength in U.S. cattle, led by Experior and Rumensin, and poultry sales in the U.S. and Europe, offset by lower demand for sheep products in Australia and planned volume declines from the strategic decision to change go-to-market models in certain countries, as well as the European recall of Kexxtone.
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Gross profit was $538 million, or 52.2 percent of revenue in the third quarter of 2024 with a 220-basis point decline in gross profit as a percent of revenue compared to the third quarter of 2023. The decline was primarily driven by higher inflation, unfavorable manufacturing performance, and product mix associated with the divested aqua business, partially offset by increased pricing. The year-over-year change in gross margin from reduced throughput at certain manufacturing sites was largely neutral.
Total operating expenses were $410 million for the third quarter of 2024. Marketing, selling and administrative expenses increased 3 percent to $323 million, primarily driven by higher employee related expenses and increased expenses supporting the U.S. pet health business, partially offset by savings related to the company’s first quarter 2024 restructuring. Research and development expenses increased 1 percent to $87 million.